It probably should have occurred to me that some people reading my article last week, Blackstone Group LP and Your Piece of the Rock would have a more than academic interest in the vulnerability of money held in such instruments as mutual funds. It didn't. So I was slightly flummoxed when I started receiving e-mails and calls on the subject of where money ought to be put instead and then amused when Cramer of Mad Money took fire with the same story four days later.
A perusal of the Mad Money site lends weight to the idea the show is a useful shill for corporations trying to mainstream their Grid offerings above all. I did not expect this kind of, 'me tooism.' Fine. Jim and I will not be giving the same kind of advice to the anxious investor and my readership is tiny. His is huge; Our motives could not be more different.
The problem posed was the problematical security of funds invested in supposedly secure managed instruments such as mutual funds, IRAs 401Ks, pensions and annuities when these are then invested, unbeknownst to the owner, in high risk ventures such as Blackstone Group Limited Partners.
It takes three days for the agent to move the funds invested through any of the above instruments. There is no telling how long it will take to get the agent to move on the request.- if you can get them to answer the telephone in a volatile market. High risk ventures can plummet in a matter of hours.
While there is law and regulation that should make this impossible, in fact this is happening. Therefore the prudent investor must ask themselves what alternatives are available. The insightful investor who is able to encompass the whole of the action must go further than their mad money portfolio; that investor must venture into substance.
There are answers. In fact, there are two answers to keep firmly in mind.
Let's dispose of the issue of the present grid market first.
That answer is a Roth IRA. This self-managed individual retirement plan is much like a traditional IRA but contributions are never deductible and qualified distributions are tax-free. So if you know an investment in, say a promising stock in a green venture, could return dollars for pennies putting it into a Roth IRA could mean you could realize profits as follows.
You invest $1,000.00 in common stock valued at $.01 a share. You pay tax on the money. Six months later the company strikes it big with those lovely off grid units selling like hot cakes and the stock soars to $2.00 a share. You had 100,000 shares of stock worth $1,000.00. Now you have 100,000 shares of stock worth $200,000.00.
This does not include companies selling solar technologies or any other technologies linked to tax incentives. Tax incentives allow the production of higher priced approaches that will be cut off at the knees when those incentives end, which they will. These are a chaff, allowing grid corporations to continue to pump a little longer. Familiarize yourself with the faux grid offerings so you can avoid their seductive advertising and study the range of those technologies and services now approaching the market that are low cost to the consumer. Those faux green alternatives will soon be CorporaCorpses, dead in the water companies extinct for cause.
Now, you must have established that Roth IRA account five years previously to take money out. But you can withdraw funds without tax being assessed when you reach the age of 59 ½, become disabled, or want to use the money to purchase a first time home. When you die the money is inherited tax free by your beneficiaries. This is what the investment community means when it says, “buy low, sell high.”
You can move the investment yourself instantaneously using Scottrade, an online service that allows you to sell and buy for just $7.00 if the trade is over $1.00. Fees can eat up a lot of loot, so this allows you to avoid that.
Hands on and aware is the only the answer. And if this is the best strategy available using the present investment system remember it is one that gives informational access to those who control the grids and severely limits your access to your assets. But that is really only shuffling deck chairs on the Titanic. Saving your funds for the moment should not lead you to the conclusion that all else will remain status quo. The world, it is a changing.
Now to the most important grid exit issue.
Invest in yourself first. Get out of debt. Pay off your credit cards, your mortgage, that new car. Debt makes you vulnerable in ways you cannot even imagine. But you may already have seen the haunted look in the eyes of your friends who ignored the need to get off the debt grid.
Remember those endless ads cajoling you into refinancing, borrowing, buying; those seductive offers of, 'no payments for a year with approved credit?' Those were and are a trap for the unwary. GET OUT OF DEBT NOW. The opportunities for investment that will build a post Grid world are coming. If you have funds left after paying your debts keep those funds liquid and ready by following the strategy outlined above. Keep in mind what China is holding and that the dollar is about to implode, too. Take back control of your financial future.
While you did not notice prices and your 'needs' have risen to consume everything you make. This is why are you paying $2.00 for 16 oz. of water coming to $12.00 a gallon. You are paying more for water than gasoline.
Right now the Grid People are sucking out that last, sweet infusion of money stolen from those of us they view as expendable. That means you and me. It is ugly to consider; how you are going to feel when you look into your kids eyes and have to tell them there is no money to keep the power on, pay the mortgage, or put food on the table? This was a carefully honed plan that will take your job, your 401K, that IRA and your annuities and pension. You will be offered jobs you would never have imagined even considering.
Climb off now. There is hope in our future.
The dissolving economy will be flush with opportunities for improving your life; in a few years you will wonder at the choices you made that limited, not extended, the number and quality of choices available to you. Consider each point on the Grids and you can see why that is. The Grids are about forcing you into limitation at every turn. Energy, Communication technologies, Oil, Transportation, finance and more. Each of these force you to shell out money every month for 'services' and 'products' that enrich those who control those same grids. Listen and you can hear the squirrel cage you power. Keeping you working and paying is their singular goal, the bottom line. Your goals are different, they are about a better world for you, your family and for your community.
In each instance there are not one but many alternatives that make it possible to stop the outflow from your wallet and provide cheaper, more convenient, more varied and healthier options.
That world is coming.
Until then contemplate these tiny shards of sense.
In a declining economy always remember that cash is king, and keeping what you have is better than hoping what you lost will magically reappear.
Discretion is the better part of valor. When the market is roaring sometimes it is better to be a live dog than a dead lion.
Buy low. Sell high. With our market at an all time high logic would dictate that this is the time to convert to cash – beat out the big guys who will be going there soon.
The world is about to change big time. Get ready.